During the era before the Internet started making waves, it simple to understand how travel agents earned their profits and how things worked. At this present time, it even more baffling since people can easily book their own travel plans and generate their own itineraries. So, how do travel agents still make a profit during this time where the Internet and technology are providing people with the freedom to make so much of the travel arrangements and planning themselves?
There’s always this underlying question that new travel agents or agencies first consider when venturing into the travel industry business. Actually, there are a number of business models that can be related and associated with how travel agents gain profit; however, the most common of them is through commissions and service fees. You will get to understand them in full spectrum as this article progresses.
There a lot of ways for travel agents to have a business and earn money, and it applies to whether they are working as a solo agent or for an internal or local agency. The main point here is that to establish a successful business; you begin by creating a partnership with your customers. They trust you to help them find the best travel deals and exciting perks and discounts that they won’t be able to find on their own.
Now, to answer the million-dollar question, “How Does A Travel Agent Earn?” Maybe it’s best to find out the products that travel agencies utilize to derive their earnings.
TRAVEL AGENCY PRODUCTS/FRANCHISES
- Domestic Airlines
The majority of the domestic air companies do not pay commissions to any travel agents or agencies. In most cases, the airlines offer a certain percentage of their sale once an agency gets to book travelers or clients on that specific carrier at a rate that is much higher than other travel agents in the market. It’s a yes and no kind of a deal. Why? Because, yes, you get the commissions from the airline sale as promised, but it’s also a ‘no’ because you are more likely to lose a client by unceasingly selecting one airline over another. Although domestic airlines can supersede the process to make a non-profit-making venture into a beneficial one, especially when domestic tickets are scarce.
Other travel agencies have imposed service or transaction fees for processing airline travel tickets based on the agreed amount. Transaction fees may range from $15 to $50 depending on the transaction, and this rate seems to be consistent within the travel business, which was also one of the reasons that made agencies profitable again. While there are customers who would question and resist such additional fees, client carriers are more than happy to pay once the travel agent made the impossible- possible.
During your planning stage, you may seek the services of a host travel agency who can continue to perform this kind of services on your behalf especially if you foresee that the business will not be selling that many domestic carrier tickets. It is an extreme consideration on your part to impose a certain service fee rate for taking charge of airline ticket bookings. By strictly reinforcing a fixed commission policy on domestic airline tickets, your travel agency might just recover a great deal of profit from implementing transaction fees.
Most travel agencies are now providing more convenience to customers by making flight reservations and booking on several carrier websites available on the internet. By doing so, these agencies get to carry out a lot of things:
- They can get the ideal fare rates that are much cheaper for their clients from famous and trusted online travel websites- which are also affiliated or owned by carriers.
- Agencies cannot be held liable for certain actions that their customers will be doing with the ticket, because during the booking process, that transaction will just be between the customer and airline.
- Though airline’s offer awesome deals on their websites, an agent needs to be well rounded about these sites to spot the best deals and should also understand how the tricks of the trade work for their customers to utilize their savings, perks, and opportunities.
Even though airlines have eradicated commissions, there are a lot of cruise lines, tour organizers and other travel-leisure-centered suppliers, who still offer commissions at full rate when it comes to the overall air portion package agreement, leaving airline ticket selling still achievable within the industry. Booking and ticketing accomplished in other countries aside from the U.S. and Canada also provide promising commissions, offering fresh and exciting privileges for cross-border booking through a host agency located abroad.
- International Airline Tickets
As far as selling International airline tickets goes, it appears to be totally different from selling domestic airline tickets. There are monumental commissions that can be earned from shopping for various tour agencies and operators. You can even have a gross from roughly 5% to 30% or even more on international carrier bookings. The majority of the international airlines are capped or have cut their commissions just like the domestic airlines have implemented, which turns out that selling tickets through operators offers a more promising scheme.
- Tour Companies
When it comes to tour companies, they are willing to give a commission around 8% to 10% provided with an override of 18% or more! In accordance with the tour destination, overrides and commissions of 12% are promptly procurable as a reward from your proficiency. Higher commissions are even provided from a great number of host travel agencies or agents. At most times, a 10% additional commission on domestic airline tickets is freely given by tour operators so they can hit their target with the airline.
- Cruise Line
Cruise lines by and large pay travel agents a 10% minimum or higher commission on all cruises. Overrides of up to an extra of 5% to 8% are generously provided by cruise lines depending on the level of productivity an agency has reached. Another considerable override may come from host agencies that specialize in cruise trips, and travels can provide as much as 18% or above commission. If you are to look at hulking cruise sale prices, the convenience of selling it, plus the high commission rate, cruises are the perfect venture to gain a substantial amount of revenue in the travel sector.
Niche-based cruise franchises are exploration, sailing, river cruises, scuba diving cruises, and other cruises that are remarkably perfect preferences. Also, other niches within the cruise business are deemed to be more promising like river cruises, luxury cruises, adventure cruises, and other small ship cruises can pay roughly 10% guaranteed an all-inclusive rate.
- Hotels, Resorts, and All-Inclusive
The majority of the resorts and hotels pay up to 10% commission or even more during off-seasons. While some small-time hotels and resort business players do not pay any commission, you should make it a habit to double check on the details before you book your customers. Several experienced travel professionals pay more attention to ‘all-inclusive’ resorts because they are more likely to pay commissions in full on basically everything that is included with the booking sale. This ‘all-inclusive’ selling strategy appears to be an effective marketing move in this kind of business, especially when clients are booked via tour organizers or operators that pay a lot of overrides depending on the business productivity.
- Car Rental Companies
When it comes to car rental companies, commissions greatly vary. Some offer a minimum of $2 per vehicle reservation, and regardless of the value, while others are based on productivity and incentives generously pay a commission as much as 20%! There is an across the average board commission of 3% for internet bookings, 3-5% for promotional rental rates offer and 10% on recreational rates that are booked via GDS channels and networks. Once again, do not expect much revenue from domestic rental cars because it goes side-by-side with domestic airline ticket booking.
- Travel Insurance
You can expect a commission of 10% to 35% and sometimes more from travel insurance. In most situations, independent insurance policies are even better than what cruise line’s or tour operators’ offer because they can pay higher commissions.
Some airline charters pay at least 5% to a max of 10% commission, but if you need a significant number of reserved seats, then the commission rate becomes negotiable. The cruise line, motor coach, and other charters usually rely on the net price from which travel agents upgrades to match their selling price.
- Group Travel
In general, group travel’s rate is based from the ground up, and the majority of the group travel rates are priced net of commission. Therefore, for a group to be profitable, it is proper to make a 25% up to 35% commission into its closing selling rate. This is to enable the exceptional costs affiliated with the planning and marketing of the group itinerary and activities. Usually, the supplier’s net prices are generally discounted for agents to increase their rates.
- Travel Agency Service Fees
Since the eradication of commissions from domestic airline tickets, several travel agencies found other options by presenting additional fees for special services. Normally, travel agencies charge an amount of $10 to $25 fee for just the issuance of airline tickets in amounts less than $300 to customers. While travel agents present them with a quality level of customer service which they cannot acquire from a travel carrier or any airline’s website. Additional transactions fees are customary for certain services like ticket reissue, doing a much-discounted travel fare search, deliveries, cancellations, Plan to go Agreement, consultation, Retainer Agreement, Plan to Cruise Agreement and other fields where travel agents work the extra mile to provide clients with everything they need.
Since the travel agency or a travel agent provides services to people, it is justified that they find ways to supply the monetary needs of the business to maintain the operation and continue to serve clients with the best of their interest.
Now, let us go deeper into the details on how a travel agent earn.
HOW DOES A TRAVEL AGENT OR TRAVEL AGENCY EARN THEIR RIGHTFUL PROFIT?
After understanding the various travel products and franchises that affect the way travel agents gain their revenue, the following items are the basic sources of their business profits.
- When a consumer asks a travel agency or travel agent about a certain jaunt, it means that they want to book a trip, which usually includes hotel accommodation, car rental, tour (if applicable) and cruise lines. All these said inclusive would be paying a certain amount of commission to the travel agency for linking and including their business in the booking. This scenario happens across every industry; therefore, agencies or agents are one-sided every time they send a traveler to one hotel or cruise line over another. The agent’s role is to pick the best supplier based on what the customer needs for that trip. It’s all fair in this business.
- BUSINESS TRAVEL CHARGES
- Since traveling is part of any business, the majority use an exclusive travel agent to deal with all their travel details and needs. A business trip has a totally different itinerary compared to a recreational trip with family and friends. An all-business-centered trip will need to book a conference room, cars, and drivers for business meeting transportation and hotel accommodation. Although airlines no longer pay commissions on most of their booked flights, they still do when it comes to business classes or special routes and tours. Travel agents who are pros in the travel industry establish a relationship with their customers and the suppliers that will provide them with all the travel needs. It is very much different from a family vacation because this kind of travel requires a lot of skill and knowledge.
- TRAVEL AGENT SERVICE FEES
- Any travel agency or agent who is in charge of an entire travel package for a client can impose certain fees for their all-inclusive travel service. This is the best option for couples, families, and even solo travelers who wanted to partner with an agency that can take care of all their travel needs and preferences. Travel agencies offer tour packages to customers who exclusively include complete travel accommodation along with holistic jaunts from carrier booking tickets to the transport rental and special amenities like theme parks tour packages. The travel agent instantly acts as a tour guide to whatever country a customer wanted to visit. Therefore, he or she should be knowledgeable about different countries, places, and tourist destinations. For this special service and customer satisfaction, the client pays an extra service fee.
- TRAVEL AGENT SALARY
- The income of a travel agent depends on whether he or she is a member of any travel agencies or is an independent agent. Some agents know a lot of information when it comes to a specific area or country and travel packages. That knowledge is or can be gratified proactively with a higher commission or payment from clients. The rate of the commission per package can range from 10% or more for every booking. For the time being that a travel agent can book roughly around $100,000 in revenue annually for various types of businesses in travel booking, accommodations and carrier tickets, agents will only receive a portion of that generated earnings.
- TRAVEL VENDORS LISTING
- If you are creditable travel agency or agent, you can build and manage your own website and list of multiple vendors and suppliers which travelers, clients, and customers can easily find every time they search for travel options on the Internet. You can point out certain vendors who have premium offers and listing so that customers can check on them and eventually choose them first. In the event, you can charge the supplier a fee monthly for including their business on the listing available on your website. Suppliers and vendors such as resorts and hotels can be asked an additional fee for including their company photos and giving the description of their business longer exposure on the listing of your site.
These are just some of the pragmatic ways on how you can gain if you decided to become a travel agent. Just remember that the more customers you refer to any of the travel vendors, the more chances to earn big.
It is not enough that you know where you can earn from being a travel agent. You should also realize that there are three factors behind it: that those commissions and fees are very important, that it is also important to draw clients to your site and that you should work hard to fulfill the needs of your clients. You cannot earn a single thing if you do not have a customer as well as the right marketing and networking strategy, which is why the following points are your guide to achieve your target revenue.
SOME STRATEGIC TIPS
Know Your Trade To Earn Commissions
- Focus on high-end customers.
At present, people utilize the Internet more when it comes to their travel booking needs. However, most of them still prefer the easiest and fastest way to settle things. They are more than willing to pay just to get additional help in doing their itinerary, scheduling their flight and making their own arrangements. If you pay attention to these kinds of clients, your time and resources will be used appropriately.
- Look for the commissions.
There are several companies, as well as airlines that have discontinued paying commissions to travel agencies or agents. Your option is to look for cruises, hotels, and resorts that still pay commissions. The truth is the more expensive cruises, and resorts are the ones who are trusted to pay commissions.
- Be upfront about fees.
Since commissions have been eliminated from the system, there are a lot of travel agents who charge an additional fee to clients if they have requested a special package or travel destination. If the client is traveling someplace where you can bank a commission, be honest with the client that they will be charged an extra fee, so they are not surprised once they find out. Ideally, you will be charging custom packages that will require more research and planning.
- Maintain professionalism all the time.
From the way you answer your emails to dealing with phone calls, maintaining your professionalism will distinguish you for being a superb travel agent. Yes, it is important that you build a rapport with your customers, but being professional means that when answering emails or phone calls it must be well polished and competent sounding. Even the flow of conversation should be smooth and engaging. No jokes or whatnots allowed.
- Train yourself to be the master in your field.
To successfully meet your clients’ needs and expectations, you need to be able to discuss the various destinations and travel packages with them and have the utmost confidence. Being able to travel to the locations you have booked is a plus, but so are the stories and photos, you have gathered from other customers. Attend industry shows, travel expos, and product training. Read a lot about the famous tourists’ destination through travel books and information-loaded websites. The more you know about your field, the more you provide top-notch service to your customers.
- Specialize in a specific area.
Being more detailed and focus on what you are good at gives you more room to become the best in that area. Also, it is easier to convince and attract people to your services because you have that certain niche that they will really be interested in. You can specialize in various trips or tourists’ destinations. Like maybe you want to focus on the East Asia tour or the European historical places; your area of focus depends on where your passion lies, and it will show when you talk with your customers.
- Prepare surprises for your clients.
Of course, this is not the type of surprise that you see in parties and festivals but, who won’t be excited if they find out that they are getting some freebies or unexpected perks, right? So when you prepare something that your customers can get for free during their trip, they will never forget you and your services. Now, for this to materialize, you have to understand the needs and wants of your clients, so you know what and how to set up those little things for them. For example, you can organize a little dinner for free in the hotel where your customers will be staying or a bottle of wine to share the moment they stepped into their room. There’s a lot of ways to excite them; you just have to be a little creative.
Meeting Customers’ Needs
- Don’t be a salesperson; be a people person.
Part of being a travel agent is being a salesperson, too. Your clients want to feel that they are comfortable and that they can trust the travel agent or agency that they want to take care of their much-awaited jaunt. They will never want to feel like you are pushing them into something that they don’t want to try or are not completely interested in.
- Be sensitive enough to what your customers want.
When talking to your clients, find out what kind of vacation they have in mind. Ask them about some outdoor activities that they might want to try or experience. Take time to get to know your customers better so you can confidently provide them with what they exactly need during their trip.
- Provide your clients with beefy details.
Travelers wanted to know everything about their trip and what they are getting themselves into. The moment they approach you, see to it that you can provide them with all the information that they want and have to know. In that way, they can feel comfortable and secure with you handling their travel agenda.
Marketing Your Services
- Show your clients the value of what you are offering.
There are still some nomads out there who don’t see the value of having a travel agent. But since you are an expert in coordinating tours and booking international travels more flawlessly than any average person can, you can use this to market yourself and showcase what you can do to your advantage.
- A little discount won’t hurt.
Some DIY travelers don’t realize that a travel agent can offer them better deals and much cheaper rates than what they can get by scouting alone. Use this technique to lure clients in because they can’t just simply say no to a good offer.
- Make use of social media.
The best thing about social media is that it can easily build a community of diverse individuals. Use this platform to engage with your clients by posting interesting information about the various travel packages, destinations, and travel tips. Eventually, this page can be your tool to lure customers to your products.
Although it is pretty obvious how the travel agency paradigm has completely changed even before the birth of the Internet, there are a lot of great opportunities that can potentially help travel agents to earn an income that can support their families. Those clients who wanted a customized trip, a tour and those who wanted to avoid disappointments when it comes to travel accommodations know that they can rely on a travel agent who can confidently arrange everything for them which they can never find online. So, strive to be that top-notch travel agent.